In Shayne McQuire’s The Silver Bull Market, he highlighted four important factors to consider before buying silver or gold:
1) Investment safety refers to your capital protection from the financial market risks. Most people always lament that owning silver or gold bullion does not provide dividend incomes. However, they don’t realize that precious metals allows you to remove wealth from the financial system. This is because gold and silver have historically been used as store of wealth and gold in particular, is seen as an effective tool to beat inflation. Take the current Euro crisis as an example. Greece is facing possible exit from the Euro because of its massive national debts. The country had been previously bailed out with a $275 billion international loan and is now asking for fresh fund of $10 billion euros in short term financing. Clearly, the country’s plight shows that the Europe economies are not doing well and holding on to the Euro currency might be risky as it could face possible devaluation if the crisis spreads across Europe.
2) Investment potential refers to the ability for the price of silver or gold to rise over the long term. It is interesting to note that while Warren Buffett disdains gold for its lack of utility, he views silver differently and even purchased 130 million ounces (at low price of $6) in the late 1990s, one fifth of the global production at the time. He would have made a lot of money in the period of 2008, the year of the worst global financial crisis in recent memory. This was because silver performed extremely well against other investments.
3) Liquidity risk refers to the ease of buying and selling silver or gold. This can be an important consideration as who would want to buy something that cannot be sold? On this note, rare silver or gold coins tend to fare poorly as compared to mainstream coins. Jewellery is easier to sell but the margin would be lower due to the premiums for the workmanship. In Singapore, liquidity is not an issue because investors can sell their silver or gold bullion to dealers like BullionStar.
4) Government risks refers to rule changes regarding gold and silver investments. In Singapore, the government exempted precious metals in 2012 with the objective of making Singapore a trading, transit and storage hub of precious metals. Since then, many dealers, wealth management banks and vault operators had set up infrastructure services in Singapore, hoping to catch a slide of the action. Metalor had also set up a gold refinery and bullion product manufacturing plant in Singapore in 2013. However, it should be noted that the investment environment is not so conducive in every country. For example, in 1933, due to a wave of bank failures, the United States government was forced to confiscate gold from the individuals and companies.
The Silver Bull Market is now available nationwide at all major bookshops and popular online e-book retailers. For a list of retailers that are available in your location, visit: www.wiley.com/buy/9781118383698.